From The Metro:
Thousands of people are falling behind on their rent as prices rocket and salaries stay the same.
More than 10,000 tenants contacted the Consumer Credit Counselling Service in the last 12 months – a rise of 27 per cent on the previous year. On average, tenants were £760 in arrears and regularly left with a disposable income of just £35 a month after paying all their bills.
Many were also being kept off the property ladder after rising rents ate into their take-home pay. People in London and the south east were worst affected, according to property website Rightmove. They shell out about 40 per cent of their take-home pay on rent, compared to about 35 per cent in Scotland and the North East**.
Over the past few years, there has been pretty much a first-time-buyers' strike, if you're not up for saddling yourself with a crippling mortgage, you can refuse to play by not buying.
So far so bad.
But everybody has to live somewhere, and if you're not paying vast amounts of mortgage interest, you're paying vast amounts of rent instead, so you're still propping up the Ponzi* scheme. There is no way out - it's like being charged for breathing instead of everybody getting precisely enough air they need to breathe every day for free. Land is the ultimate monopoly.
* Or are house prices a Pyramid Scheme? One or the other.
** Other research said that the gradient was much steeper than that, from 29% in North West or Yorkshire up to 42% in the South East (London off the scale as usual, at 71%).
Wednesday 30 May 2012
Stop the Ponzi* scheme! I want to get off!
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7 comments:
Hmm, not convinced. Everybody has to live somewhere, true, so you can't escape rent. But you could reduce it very much by moving to the Sahara. Or Antarctica. In fact, I dare say there are a few million square miles on the earth where the owner/sovereign would suffer you to live rent free!
You're much better off sticking to the argument that because the state paid for the London Underground, the state should capture *all* the capital gains to the surrounding land / the natural unit of land ownership should be per country, not per small plot.
Whether the state should then pay the money out as a Citizen's Dividend is a separate matter. I'd much prefer a transferable Shareholder's Dividend.
J, yes, you would pay zero rent in the Sahara because it's worth nothing, but that sort of goes against your statement that "the natural unit of land ownership should be per country", with which I wholeheartedly agree.
Yes of course the government should pay out most of the revenues as Citizen's Dividend (or vouchers or whatever), because it is the people of a country who created most of the rental value (the bit which nature gives each country for free is just pot luck).
BTW, what's a "transferable Shareholder's Dividend"?
James, the subtext to this article, like all articles about rent, is "we can't have you paying rent on property to evil landlords, you should be paying rent on money to benevolent banks". I notice they don't give the cost of mortgage interest as a comparison. I'd guess it must be greater, since, thanks to the Great Deception, most people who rent are frustrated home-owners, and if it were the same, or less, then these people would not be renting. But rising house prices are only seen as a bad idea when they push up rents, otherwise they make us all richer, dontcherknow.
"you're paying vast amounts of rent instead, so you're still propping up the Ponzi* scheme."
Come, come, Mark, Ricardo's law and all that. If you can afford the rents, that's the level they'll always be, Ponzi scheme or no Ponzi scheme.
B: "If you can afford the rents, that's the level they'll always be, Ponzi scheme or no Ponzi scheme."
Yes, fair point. The flipside is that under current rules, only a minority are collecting all the rent. If I were in charge, everybody gets a small equal share in the (ground) rent. So by definition, about half of people would pay no net (ground) rent.
"BTW, what's a 'transferable Shareholder's Dividend'?"
Imagine you could sell your right to a Citizen's Dividend...
(Cue Mark getting up in arms about how people shouldn't be able to capitalise anything)
J, it's a free world. If people want to borrow and spend money today, secured on their likely future CD income, then good luck to them. I'm more of a "save up before you buy stuff" kind of person, but there would be times when it would be wise to borrow now/spend later:
For example, it makes little practical difference if you borrow money to pay university fees, and then repay the loan out of your future income (being earned income + CD) or whether you take out a £30,000 loan today, and sign over your right to CD for the next ten years in exchange, and then use the loan money to pay for your university costs in cash.
Bayard, Rent is generally the same or higher than mortgage payments. That's one of the things that con people into buying when they can't afford it. The big costs that people tend to underestimate are repairs and maintenance and the really sneaky one -- opportunity cost on the equity. That's the one that can mean that renting is actually cheaper than owning a house even if you can afford to buy it for cash.
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